US stocks finished last week in the green, with the S&P 500 and Nasdaq Composite booking a third straight week of gains.
Performance was boosted by a strong labor market that may make it easier for the Federal Reserve to hike interest rates as it looks to combat rising inflation.
The Dow Jones Industrial Average added about 140 points, 0.4%, ending near 34,818, while the S&P 500 index edged up 0.3% and the Nasdaq Composite advanced 0.3%. For the week, the S&P 500 rose 0.1% and the Nasdaq gained 0.7%, but the Dow ended 0.1% lower, halting its weekly win streak to two weeks.
On the local front, the S&P/ASX 200 edged 0.1% lower on Friday, having traded in a narrow range, but ended the week 1.2% stronger to post the third consecutive week of increases.
Tech and consumer discretionary sectors came under pressure, with Block Inc CDI (NYSE:CDI) shares down 2.6% to $180.50 and Tyro Payments Ltd off 4% to $1.69.
The market is expected to be higher today.
Here’s what we saw (source Commsec):
- The Euro fell from highs near US$1.1074 to lows near US$1.1028 and was near US$1.1055 at the US close.
- The Aussie dollar rose from lows near US74.72 cents to highs near US75.22 cents and was near US74.85 cents at the US close.
- Global oil prices fell on Friday as members of the International Energy Agency (IEA) agreed to join in the largest-ever US oil reserves release, however they did not agree on volumes or the commitments of each country.
- The Brent crude price fell by US32 cents or 0.3% to US$104.39 a barrel.
- The US Nymex crude price lost US$1.01 or 1% to US$99.27 a barrel. Over the week, Brent was down US$16.26 or 13.5%. And the US Nymex slid US$14.63 or 12.8%, the biggest dollar drop since 2011.
- Base metal prices were mixed. Zinc rose 4.1% after London Metal Exchange on-warrant inventories fell 10% to 95,125 tonnes, their lowest since June 2020.
- Tin was up 4.5% but aluminium fell 1.3%. For the week, zinc jumped 8.2%, but nickel lost 6.3%.
- The gold futures price slid US$30.30 or 1.6% to US$1,923.70 an ounce. Spot gold was trading near US$1,924 an ounce at the US close. Over the week, gold shed US$30.50 or 1.6%.
- The iron ore futures price lifted US$9.14 or 6.1% to US$159.98 a tonne on Chinese mill re-stocking. Iron ore gained US$9.81 or 6.5% last week.
Australian market
Australia has secured a trade deal with India that looks to offset losses caused by the fractured relationship with China.
The interim agreement with the sub-continent partner known as the Australia-India Economic Cooperation and Trade Agreement, will see India cut tariffs on Australian lamb, wool and rock lobsters as part of a new trade deal.
The agreement comes as the Morrison Government is expected to announce the date of the forthcoming Federal election – approximately four weeks away – with India now likely to move up the trade partner ladder, where it currently sits in seventh place.
The Australian Government has stated more than 85% of Australian exports to India will see tariffs eliminated in a deal valued at more than $12.6 billion a year.
Over a 10-year period, this would rise to almost 91%, or exports valued at $13.4 billion.
Further to this, about 96% of goods imported from India are expected to enter Australia duty-free.
This is an interim agreement that PM Scott Morrison says, “opens a big door into the world’s fastest-growing major economy for Australian farmers, manufacturers, producers and so many more”.
In a bid to “contribute to both workforce requirements and to boost tourism to support our post-COVID recovery”, India’s youth will be able to participate in working holidays in Australia, with places set at 1,000 a year.
The Australian Government said sheep meat tariffs of 30% would be eliminated when the deal enters into force, “providing a boost for Australian exports that already command nearly 20% of India’s market”.
“Wool will have the current 2.5% tariffs eliminated on entry into force, supporting Australia’s second-largest market for wool products,” the government said.
Tariffs on Australian almonds, lentils, oranges, mandarins, pears, apricots and strawberries are also expected to be reduced.
Indian Commerce Minister Piyush Goyal is due to touch down in Australia tomorrow for a four-day visit to discuss opportunities for Australian producers, including in the critical minerals sector.
Interest rates set to remain on hold
The Reserve Bank of Australia is expected to keep interest rates on hold at its monthly meeting tomorrow.
Although under pressure to begin tightening monetary policy, economists are flagging June as D-Day.
Meanwhile, pre-election budget spending could further fuel inflation.
NAB said the Reserve Bank “has been very quiet of late, and the data continues to outpace their forecasts with the unemployment rate already at 4% and set to head sub-4% next month”.
NAB said the RBA would take a balancing risk approach.
“A greater nod to balancing risks in the post-meeting statement would put guidance on a more agile setting, which we think is needed (NAB has pencilled in a Q1 trimmed mean print of 1.2% q/q against the RBA’s Feb forecast of 0.8%).”
Key economic data out on Monday includes the Australian Bureau of Statistics' February data on retail trade, ANZ's job ads figures and the Melbourne Institute's monthly inflation gauge.
US markets
Medical technology company Edwards Life Sciences was a big winner up 4.5%, while gold miner Newmont gained 4.2%. These were the top-performers in the S&P 500 index. Verizon Communications was 2.3% higher and led the Dow Jones index higher. Apple shares fell 0.2% after JP Morgan removed the stock from its analyst "focus list."
Tesla delivers over 1 million electric cars
Tesla has shipped a record number of cars over the past year.
The company delivered 1.06 million cars from April 2021 to March 2022. This includes more than 310,000 cars in the first quarter of 2022, up 67% over the same period last year.
Analysts had predicted 317,000 cars, according to data compiled by FactSet, however, the number is still impressive.
On the negative, growth slowed sharply, with deliveries rising just 0.4% since the fourth quarter of last year.
The number of vehicles produced, 0.1%, is also slightly down against the previous quarter.
“This was an exceptionally difficult quarter due to supply chain interruptions & China's zero-COVID policy,” Tesla CEO Elon Musk said on Twitter, referring to China’s strict health restrictions. “Outstanding work by Tesla team & key suppliers saved the day.”
European markets
The markets were higher on Friday.
The pan-European STOXX 600 index gained 0.5% with mining shares up 2.2%. The index was up 1.1% for the week. Eurozone annual inflation surged to a record 7.5% in March (survey: 6.7%). The German Dax index added 0.2% and the UK FTSE index gained 0.3%.
“I don’t think that the actual rally in equity prices is sustainable. But I still believe that the FTSE 100 is in a better position to outperform the European and US peers due to high exposure to energy and commodity prices,” said Ipek Ozkardeskaya, a senior analyst at Swissquote.
“For now, the best place to be in for investors is still oil- and energy-related investments, even though we may see a downside correction after such a strong rally over the past couple of weeks.”
In London trade, shares of Rio Tinto (+2.4%) and BHP (+2.3%) both advanced.